“I reduced my taxes by 1000 euros by paying money into this bank account”

This is the last moment to take advantage of this tax optimization.

The end of the year that is approaching is not only synonymous with the beginning of the Christmas headache. Too few French people think about it, but it is also – and above all – the last moment to reduce the amount of taxes that will have to be paid in 2025. In a few weeks, it will be too late. 

To reduce the amount to be paid to the tax authorities, without making expenses such as donating to an organization, there is a mechanism accessible to all French people, regardless of their income. This allows you to make significant savings since, on average, the system allows you to reduce the total amount of taxes by several hundred euros.

With retirement in mind, many French people are looking for various ways to put money away side. Real estate investment, savings accounts, financial investments… Several methods are used. One of them is increasingly popular: the Retirement Savings Plan (PER).

More than 15 million French people have one. It is an account, opened at the bank and different from life insurance, into which money can be paid and which generates some interest. But the main advantage does not lie here.

When a payment is made into your PER, part of the sum is tax deductible. It can be deducted 11, 30, 40 or 45% of the amount, depending on your marginal tax rate (it is indicated on your latest tax notice). Concretely, if during a year I pay 3900 euros on a PER (the average payment in 2021), I can subtract 429, 1170, 1560 or 1755 euros from the total pay to taxes.

However, do not expect to reduce the amount of your tax to 0. A deduction limit is set at 10% of your net taxable income.

To benefit from this reduction, you must not delay in making a payment into your PER. In fact, it is the amounts paid up to December 31 that will be deductible on your next income tax return in spring 2025.

Also note: any payment into a PER automatically blocks the money until retirement. Only a few exceptional cases allow it to be withdrawn before this date: purchase of a main residence, death of a spouse, disability, over-indebtedness, expiry of unemployment benefits or cessation of activity after compulsory liquidation.